5 Cost Reduction Priorities for CEOs

Three out of four hospital and health systems CEOs cite overall cost reduction and efficiency as one of their top two financial priorities, so it was no surprise to hear a robust conversation on this hot topic at HealthLeaders Media's annual CEO Exchange.

4 comments on "5 Cost Reduction Priorities for CEOs"
Tom O'Brien, Sr VP Healthcare (12/12/2013 at 10:34 AM)

Two paths to success... 1) Cost must be at the transaction/process level. TDABC costing has been the best source for this (see Harvard Business Review, "The Strategy That Will Fix Health Care" by Michael E. Porter and Thomas H. Lee in the October 2013 - page 11) 2) Change management. EVEN if you have good data to share with the physicians a strong change acceleration process is key. Data alone will not get you to the finish line!
Rob Tholemeier (11/29/2013 at 11:56 AM)

One of the things I have been looking for is the use of activity based costing in HCOs, which seems to be almost unheard of. I do not see how you can effectively reduce costs unless you know them. In labor intensive industries, with high paid labors, it seems like the adoption of activity based costing is a pre-requisit. Rob Tholemeier Chilmark Research
Stefani Daniels (11/12/2013 at 1:39 PM)

Back on July 14, 2008 HealthLeaders Media published an article 'The Myth of Length of Stay." In it, I presciently entreated execs to stop their slavish focus on LOS and instead focus on cost per case...it is the last pool of untapped opportunities to drive costs down. The volume of excessive, wasteful, and duplicative interventions that physicians prescribed is well known to those of us who have been on the front line. I'm delighted that execs finally see the light - though not surprised it took so long.
Linda Galindo (11/12/2013 at 12:37 PM)

Overall cost reduction and efficiency are cited as their top two "financial" priorities. No different than any other business. What are their top two PATIENT CARE priorities? I understand "no margin, no mission" as that has been the mantra I have heard for the last 15 years as a reason to focus on the bottom-line in hospitals. But this sounds akin to "alarm fatigue" for providers working on the front-line. Same challenge different day; it's a lot of noise. Seems to me if the top two patient care priorities named by a CEO w/physician agreement, are the do or die focus, the "WHAT" will be clearly stated and now everyone can work toward the "HOW". If a Board holds the CEO accountable for the "what" (strategic plan) and stays out of the "how" the CEO can do their job using the Board as a resource. Seems the same needs to go for the CEO and medical leadership to the staff of the organization. I'm curious to know what the top two patient care priorities are.


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